Biden Administration Moves to Protect Americans from Climate-Driven Financial Risk

“Climate change poses serious risks to our financial system. Increasing wildfires, droughts and severe weather threaten the stability of the home mortgages, insurance policies, and small business and farm loans that underpin the U.S. economy. Unprecedented warming jeopardizes everything from our retirement plans to our municipal bonds. It is a danger to businesses, investors, and the American public.

“President Biden’s executive order today will lift the veil from these risks, which are often hidden within financial systems. It creates a government-wide strategy to quantify the risks posed by climate change for both public and private financial assets. This will enable agencies from the Treasury Department to the Labor Department to the  Federal Insurance Office to start determining ways to minimize climate-related financial risks.

“There is more we’ll need to do. We need mandatory disclosure of climate-related risks from businesses and financial institutions, for example. Right now, investors lack crucial information they need to make the best choices. We also need to put a price on carbon, as the Commodity Futures Trading Commission recommended last September.

“The most expensive thing we can do about the climate crisis is ignore its risks. Today’s executive order is a big step toward making the existing financial risks of climate change known, predicting future risks, and unlocking policy solution that will help us take action.”

- Nat Keohane, Senior Vice President for Climate, Environmental Defense Fund